Mumbai Tribunal rules on important arm's-length case
April 26, 2010
Hasnain Shroff and Vinita Chakrabarti report on an interesting case, where it was held that in order to determine the arm’s-length price of an international transaction, the arm’s-length margin should be applied only on the international transaction and not on the entire costs or sales of the taxpayer.
This appeal by the revenue came as a result of orders passed by the commissioner of income tax (appeals) (CIT(A) XXXII in respect of three different taxpayers for the assessment year (AY) 2004-05 (Two International Pvt. Ltd. , Tara Jewels Exports Pvt. Ltd. and Tara Ultimo Pvt. Ltd Vs. ACIT ( 2010-TIOL-166-ITAT-Mum)). As the facts of all the three cases were identical except the amounts involved, only one appeal is taken up as agreed by the taxpayers and the conclusion applied to all three cases
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